Man, for so long I had a love/hate relationship with money. Of course, like most people, I wanted more money but I also hated that I never seemed to have enough.
We were living paycheck to paycheck and it felt like we would never be able to live the life we wanted.
What I didn’t realize is that the life I wanted was right at my fingertips and I actually had all the money I needed to make that life happen. However, the way I managed my money wasn’t serving me.
So many people, like myself, get caught in this cycle and believe they are bad with money.
If you are fed up with feeling broke and stressed about money, then listen up. I am going to break down how you can make your money work for you starting today.
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Signs that you’re bad with money
There are some pretty obvious signs that your money isn’t working for you.
- You run out of money before you get paid
- You’re behind on bill payments
- You’ve got debt collectors calling you
- You constantly find yourself saying things like, “I’m broke.” or “I just can’t afford to…”
Now, let’s be honest, sometimes we have those times in life where we are just down. Financially things have gone wrong and we are struggling. We have all been there.
Unfortunately, many people who believe money is the problem are actually the cause of their own financial problems. If this is you, the first step to solving your problems is admitting that they exist.
The first step in making money work
Okay, ready? The first thing you need to do to get your money work for you actually has nothing to do with money.
Instead, making your money work for you starts with knowing what you want. No, I’m talking talking about that cute top you saw at the store, or that big screen TV your neighbor has.
I’m talking about deep down, at the very root of your existence.
What I’m talking about is knowing your values. Those pieces of your personality that never go away. Author David Bach explains values perfectly in his book, Smart Couples Finish Rich.
How to figure out your life values
Figuring out your life values is a little more challenging than you might imagine.
Trying to figure out what your life values are a lot different than trying to figure out something that you want. We all know different things we want in life. Things like money for retirement, to travel more or a bigger home.
To find your values, you take the things that you want and figure out what value in your life they are attached to.
Let’s take a look at my personal wants/values list so you can get a better idea of what I’m talking about.
Turning wants into values
WANT: Travel more
- I want to travel more because I want to see the world.
- Seeing the world would broaden my horizons.
- Broadening my horizons would make me smarter and grow as a person.
- Growing as a person = Self discovery
VALUE: Personal growth
WANT: Pay off our mortgage
- I want to pay off our mortgage so that we have more money.
- More money would mean less financial worry.
- Less financial worry would mean being set for life.
How are values different than wants?
So what is the defining difference between a want and a value?
At the core of our being, our values rarely change. They are who we are. In fact, you may find, when you go through your wants and get down to the core values behind them, you’ll start to see patterns of similar or the same value behind your wants.
Other examples of values:
- Peace of mind
- Helping others
- Helping family
Budgeting for your values
So once you know your core values (should be narrowed down to about 5), how do you start planning your budget around your values? In other words, you know your values, now how do you make your money work for you?
First, you’re going to need a solid budget in place. Use my Fun Sized Budget Bundle to lay out a simple budget and get guidance on how to get started.
Learn to build a secure budget and free up extra cash each month with Budget Hacking.
Know where your money is already going
The first step in making your money work for you, once you know your values, is figuring out where it is currently going.
This can be done by doing a 3 month budget breakdown. Yeah, I know this might not sound like a lot of fun, but I promise it will be a very eye opening experience for you and your spouse.
- Do a basic budget where you start with your take-home pay, subtract your expenses (like mortgage and bills). You can do this easily with the budget provided in my Budget Bundle.
- Get your hands on your last 3 months worth of bank statements.
- Make 5 columns.
- Unplanned purchases
- Any purchases under $10
Does your spending align with your values?
Now, when you look at where your money is going each month, does it line up with your values?
First of all, knowing how much you are spending on food and gas is a great start to planning future budgets and working to eliminate unnecessary spending in these areas.
If you are spending $200 each month on quick fast food purchases under $10, it’s safe to say that this doesn’t align with your values. Unless your values are to clog up your arteries by the time you turn 40.
Where is the biggest chunk of wasted money going? How can you work to eliminate or reduce your expenses in this area?
Helpful must-read budgeting posts:
- How to Stop Taking Money Out of Savings
- Shopping Tips to Feed a Family of 5 on $100 Per Week
- 16 Ways to Reduce Your Monthly Bills Without Trying
- The Best Debt Payoff Plan for Compulsive Spenders
Making your money work for you
Once you know where you are wasting money each month, it’s time to start making that money work for you instead.
Plan a realistic budget
Start planning a budget making sure to exclude the cost of gas and groceries.
If you are able to, set a goal for a more limited food budget. That means if you are going out to eat, work on finding ways to reduce the number of times you go out each month.
Not sure how much to budget for food? This is something I go over in my Budget Hacking course so you can plan a realistic budget for you and your family.
Ideas for smarter grocery shopping
Challenge yourself to limit how much you spend at the grocery store. If you are not great about planning out meals or sticking to a budget, check out the $5 Meal Plan. There are a ton of healthy and budget-friendly grocery lists available that take the guesswork out of planning meals on a budget.
Avoid wasteful spending
If you are struggling with unnecessary spending, there are some great ways to help get it under control.
- Pay with cash
- Set a “fun money” budget each month
- Create a sinking fund for fun stuff
Pay yourself first
If you are not taking advantage of retirement funds like a 401K through your employer or a Roth IRA, then you are missing out!
Funding something like a 401K means you are paying yourself before anyone else (including the government). While Roth IRAs are taxed during the time of deposit, they are something you are able to withdrawal from interest-free.
If you are not yet investing with these types of accounts, I recommend you get started right away.
Need more help? Find a financial advisor near you.
Fund your values
If you have values that involve things like traveling or making large purchases, then make sure you are saving for these things as well.
The best part about having a budget is that you are in total control of where your money ends up.
How to fund fun accounts
The best way to start saving for the “fun stuff” in life is through easy access online accounts that pay you when you save. This way, you’re getting an added boost on your savings.
Here are my 2 most recommended accounts:
- Savings Builder – Get a 1.9% interest rate with CIT Bank by depositing only $100 per month into a Savings Builder account!
- Money market account – Open a money market account with CIT Bank to get a 1.85% return on investment.
At the end of the day, it is possible to live life on a budget and still have access to all of the things that you truly want for your life. It’s just a matter of buckling down, doing the work and figuring out where your values truly lie.